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Malaysia Regulates Cryptocurrencies | New Rules that Must be Followed

Malaysia regulates cryptocurrencies as of today. The new rules affect both digital coins and ICOs (initial coin offerings). Though welcomed by many, the repercussions for those who don’t comply are deemed particularly harsh.

What will this mean for trading?

Malaysia Regulates Cryptocurrencies

The country’s Minister for Finance, Lim Guan Eng, announced that the order to regulate cryptocurrencies and initial coin offerings as securities has come into force—effective today, January 15th.

Launching an unauthorized ICO or exchanging in cryptocurrencies without approval could result in a 10-year jail term and a $2.4 million USD fine:

“Any person offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil [$2.44 million].”

Ouch.

Pro Crypto

Despite the harsh repercussions for illegal trading, Malaysia is predominantly pro cryptocurrency. The minister stated:

“The Ministry of Finance (MOF) views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries. In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses and an alternative asset class for investors.”

Trading

So what does this mean for traders as Malaysia regulates cryptocurrencies?

An official framework will be launched by the end of Q1 this year. This will detail the exact regulatory requirements for launching an ICO and trading on digital exchanges in the country. In general, crypto services and exchanges must obtain authorization from Malaysia’s Securities Commission. This body will work with the central bank to ensure compliance.

>> Russia to Avoid US Sanctions with $10 Billion Bitcoin Investment

As stated above, without official approval, traders face serious charges if caught.

The Capital Markets and Services Order 2019

Called ‘The Capital Markets and Services Order 2019,’ the next few months will prove crucial as traders and exchanges work to comply with the new relevant securities laws and seek approval by the commission.

India also recently regulated cryptocurrency. It spent most of 2018 implementing regulations for crypto services in its country.

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Denmark Crypto Taxes | It’s Making Sure You Pay Em!

There’s no getting around Denmark’s tax agency, Skattestyrelsen, so don’t even try. The agency is pursuing Denmark crypto taxes with vigor and is leaving no stone left unturned!

Denmark Crypto Taxes

Skattestyrelsen has confirmed that approximately 2,700 individuals owe taxes on Bitcoin gains, according to a release it made earlier.

These individuals reportedly bought and sold Bitcoin via a Finnish cryptocurrency exchange between 2015 and 2017. However, they have yet to declare any profits or losses on their tax documentation. Whoops!

It’s now an agency priority to chase down these people and make them pay their dues.

Tax Director Karin Bergen commented:

“Right now we are identifying the individual citizens and keeping the new information up to those we already have […] If something does not match, we will contact them and ask for more information. However, how many people it is and what it may mean, it is still too early to say.”

Denmark Crypto Taxes: Tip-Off

But the agency didn’t just unearth this news. Rather, it received a tip-off believed to have come from the Finnish tax authorities. It is still unknown which exchange is involved, but LocalBitcoins has been touted as a potential, as it is one of the biggest international P2p Bitcoin trading platforms around.

It also just so happens to be Finland-based.

The platform recently brought in limited Anti-Money Laundering and Know Your Customer processes for “high volume” account holders.

>> Blockchain Phone: Will Samsung Enter the Ring? Trademarks Say Yes!

Tip of the Iceberg

The 2,700 individuals purchased $7.55 million worth of Bitcoin and sold $8.05 million worth. Bergen believes that figures like these are “probably just the tip of the iceberg.”

She continued:

“The knowledge we gain about data mining, segments and methods in general will make us wiser in the area and benefit from our guidance and control work.”

The attitudes in Denmark towards cryptocurrency are mixed. The country is moving towards adoption with a total of 1,500 restaurants accepting Bitcoin via an online portal. However, not paying your Denmark crypto taxes may create a few sour faces towards the digital asset.

America faces similar issues regarding crypto taxes. Tax agency Credit Karma reported that fewer than 100 people out of 250,000 declared any gains or losses on cryptocurrency in 2018.

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Beijing Bans New Update to the ICO, the Security Token Offering

It seems China really wants to give cryptocurrencies a hard time. The country has always been strict against the blockchain and crypto industry, and now it’s taking that to another level. Beijing has just declared Security Token Offerings, or STOs, illegal.

Beijing Bans STOs

So for those who may be unfamiliar, an STO creates an investment offer by tokenizing stocks or bonds and putting them on a blockchain.

An ICO raises funds for a company by selling tokens to the public. However, an STO gives holders stocks or shares in the company, and the ability to share a company’s profits through dividends.

China is always one step ahead, and the Government is well aware of the ‘update’ to the common ICO. At a wealth management forum over the weekend, Huo Xuewen, chief of Beijing’s Municipal Bureau of Finance, said the following:

“The ICO model is getting left behind for a new concept called STO. I want to issue a warning to anyone considering running an STO in Beijing. Don’t do it in Beijing–it is illegal. You can only engage in such activities with the approval from the government.”

Blockchain

STOs have become the latest mania to replace ICOs. Blockchain startups, in particular, seem to be favoring them, so much so that STOs are projected to have a market cap of $10 trillion by 2020, according to Ernst & Young.

>> SEC Charges DJ Khaled and Floyd Mayweather with Crypto Touting Violations

Security Token Offering is considered less worrisome than an ICO. As it offers stocks and bonds, a token holder does have more rights than given in the ICO model. They may offer a solution to regulatory bodies because in order to start an STO, a business must complete the traditional registration process of an IPO.

Businesses are now clambering to find a cleaner way to generate capital from crowdfunding, considering the strict stance against ICOs across the globe.

What do you think about Security Token Offerings?

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Crypto Airdrops | Crypto Ban in China Spreads to Airdrops

China does not like cryptocurrency. The country has repeatedly imposed strict sanctions against its use and relative businesses. Now the central bank of China is adding to its list by banning crypto airdrops.

China Bans Crypto Airdrops After ICO Abhorrence

The People’s Bank of China, or PBoC, has classed token airdrops as “disguised” Initial Coin Offerings (ICOs). It detailed its new scrutiny in a financial stability report, published on Friday, November 2nd.

The bank’s regard for crypto airdrops echoes its abhorrence of ICOs, describing them as “illegal” fundraisers that lead to financial fraud, pyramid schemes, and hacks.

Now Crypto Airdrops Are Banned

The PBoC believes that crypto airdrops are evading regulation by giving away free assets to investors. According to Cointelegraph“airdrops earmark a token reserve and then capitalizing on speculation in the market to inflate the assets’ value and drive their own profits.”

And despite the bank’s continuous efforts to crack down on token issuance, ICOs and crypto airdrops are on the rise. It is calling for a doubled vigilance on the part of regulators to better protect investors.

>> Winklevoss Twins Sue Bitcoin Investor Charlie Shrem

The document continues further hitting out at most aspects of the cryptocurrency industry. It is concerned about Chinese crypto companies moving abroad and using foreign “agents” to invest on behalf of Chinese citizens. It also warns against whitepapers and investment projects calling themselves “blockchain innovation.”

The overall fear is for crypto’s ability to evade capital controls and international sanctions. By encouraging a system of finance that lies outside of government control, PBoC feels money laundering, tax evasions, and illegal financing will result and impact society.

China has Never Warmed to Crypto

China has been stringent in its rules forbidding cryptocurrency. It placed a ban across crypto-to-fiat trading since September 2017, and the effect of that has been felt across the market. It has also officially blocked all websites related to cryptocurrency both domestic and foreign.

As the PBoC said previously, “to prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs.”

Crypto airdrops are the latest victim of China’s firm hand on cryptocurrency.

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Japanese Cryptocurrency Exchanges Can Now Police Themselves

Japanese cryptocurrency exchanges have been given full license to create their own regulations.

So what’s going on?

Japanese Cryptocurrency Exchanges

Earlier today, the country’s financial regulator, the Financial Services Agency (FSA), granted the Japan Virtual Currency Exchange Association (JVCEA) a self-regulatory status.

The JVCEA is made up of 16 licensed and domestic crypto exchanges. Its members are Bitflyer, Money Partners, Bitbank, Bitpoint, Quoine, SBI Virtual Currencies, Fisco Virtual Currency, Btcbox, Zaif, GMO Coin, Bittrade, Tokyo Bitcoin Exchange (DMM Bitcoin), Bitarg Exchange Tokyo, FTT Corporation, Xtheta Corporation, and Bitocean.

The FSA has declared the body as a “certified fund settlement business association.” With this new status, it puts regulation responsibility in JVCEA’s hands. The body can now police its own exchanges.

Japan’s Cryptocurrency Exchanges

JVCEA can now implement its own rules and guideline for domestic crypto trading. In doing so, it can create measures to protect customer assets and improve security, whilst also curtailing insider trading, theft, and money laundering.

And this is exactly what the body was created to do; to regulate, protect, and give legitimacy to an industry that has suffered major hacks.

>> Circle and Coinbase Launch their Joint Stablecoin USDC

Accreditation for Japanese Crypto Exchanges

In August, JVCEA submitted an application to the FSA to become an accredited body. After two months and a rigorous reviewing process, it is now an officially recognized body. The financial regulator had to “carefully examine the affairs of the Association and investigate whether proper group management can be expected.”

Now Japanese cryptocurrency exchanges can move forward and take control of the industry. JVCEA has already begun enforcing new rules effective immediately. The body has created a 100-page document with rule proposals. One example is a complete ban on privacy coins such as Monero and Dash from licensed exchanges. Another is a limit on margin trading with crypto.

JVCEA said on the news:

“With the acquisition of the accreditation, we will continue to make further efforts to create an industry that you can trust from everyone who uses virtual currency with members [exchanges].”

Japan’s crypto exchanges have been reeling from massive hacks. Notable thefts include January’s $530 million theft from Coincheck and the more recent Zaif exchange heist.

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